Go GoProcure

The government's at a tricky point in its plans to introduce an electronic procurement system for state agencies. Undoubtedly the legacy of the Incis Police computer system debacle is in people's minds.

The government’s at a tricky point in its plans to introduce an electronic procurement system for state agencies. Shortly, the States Services Commission goes to Cabinet for approval to proceed with GoProcure, the Oracle-based e-procurement system that has been in testing for the past several months.

Its nervousness in seeking final sign-off of the scheme is betrayed in a presentation for potential user agencies: GoProcure is part of e-government, and e-government “is not a massive IT project”, the slide reads.

Undoubtedly the legacy of the Incis Police computer system debacle is speaking here. Nonetheless, GoProcure is costing $7.5 million which, while a fraction of the Incis outlay, is still a sizeable chunk of taxpayer money. And when we asked a month or so ago how many agencies were willing to commit to using GoProcure, few, if any, gave a definite yes. The SSC has said it wants 20 or so definites for the system to go live, from next month.

Aside from political sensitivity to spending on public IT projects, e-procurement itself has a slight air of disrepute. It won’t have been helped by the closure of SouthFresh, an Auckland-based electronic market which sprang from the fishing industry. After flourishing initially while confined to fish sales, it sank a fortnight ago as it attempted to break into other markets. SouthFresh’s founder says despite demonstrable savings from using the market, resistance to the changes required of suppliers and buyers was its downfall.

While a fish market and government e-procurement aren’t exactly comparable, the basic requirement to make each work is the same: suppliers and buyers have to be willing to take the plunge before the benefits of electronic trading will become apparent. After all, there can be no doubt that electronic commerce is the way to go. To enumerate the benefits, start by thinking of the trees that will be saved as paper is dispensed with; then consider the speed advantages of handling purchase orders and associated bits and pieces on the desktop; and then realise what you might do with all that sales/purchasing data that is entered just once into a computer – at the time of sale – and available for future analysis.

Yes, the benefits are obvious. What isn’t is the final form of electronic commerce that is going to be palatable to all those in the supply chain. Participants at different points along the way want slightly different things. Suppliers, operating on razor-thin margins, want to continue trading without having to spend on fancy new ways of doing things. Transaction hub operators want a cut from each sale. Buyers want to combine their purchasing power and screw a better deal from suppliers. And IT companies want to sell expensive systems to run it all.

These opposing forces have been pushing and pulling at each during the past couple of years, during which several early e-commerce ventures came unstuck. But a measure of maturity has crept into the e-world lately, as events like the tech wreck have eased the pressure. Pragmatism could be about to have its day, as the inevitability of e-commerce sinks in.

GoProcure pales in comparison to what's under way in New South Wales, where the state government is spending $A140 million on a system that will handle 11 million transactions a year worth $A17 billion. One of the companies involved in that project, which is in the throes of establishing a transaction hub for New Zealand health industry buyers and suppliers, says ensuring participation in such systems is a political minefield. Governments don’t have the luxury of being able to disregard supplier and buyer feelings in the same way as outfits like IBM, for example, which two years ago told suppliers to conform to its e-commerce system or lose the business.

I can't help but think that GoProcure is the government’s chance to take a decisive lead on e-commerce.

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